þ
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
91-2003490
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification Number)
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
Non-accelerated
filer
o
|
Smaller
reporting company
x
|
Page No.
|
||||
PART I.
|
FINANCIAL
INFORMATION
|
|||
ITEM 1.
|
Financial
Statements:
|
|||
Balance
Sheets at November 30, 2009 (Unaudited) and May 31, 2009
|
3
|
|||
Statements
of Operations for the three and six months ended November 30, 2009 and
2008, and the period from September 17, 1999 (inception) to November 30,
2009 (Unaudited)
|
4
|
|||
Statement
of Changes in Stockholders’ Equity for the period from September 17, 1999
(inception) through November 30, 2009 (Unaudited)
|
5
|
|||
Statements
of Cash Flows for the six months ended November 30, 2009 and 2008, and the
period from September 17, 1999 (inception) to November 30, 2009
(Unaudited)
|
9
|
|||
Notes
to Unaudited Financial Statements
|
10
|
|||
ITEM 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
16
|
||
ITEM 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
20
|
||
ITEM 4T.
|
Controls
and Procedures
|
20
|
||
PART II.
|
OTHER
INFORMATION
|
|||
ITEM 6.
|
Exhibits
|
21
|
||
SIGNATURES
|
22
|
ITEM 1.
|
FINANCIAL
STATEMENTS
|
|
November 30,
|
May 31,
|
||||||
2009
|
2009
|
|||||||
(Unaudited)
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$
|
3,924,700
|
$
|
2,637,292
|
||||
Prepaid
expenses
|
78,226
|
193,757
|
||||||
Total
current assets
|
4,002,926
|
2,831,049
|
||||||
PROPERTY
& EQUIPMENT:
|
||||||||
Property
& equipment - net
|
-
|
25,162
|
|
|||||
OTHER
ASSETS:
|
||||||||
Deposits
|
7,990
|
7,990
|
||||||
Intellectual
technology property, net of
|
||||||||
accumulated
amortization of $10,008 and $9,753 as
|
||||||||
of
November 30, 2009 and May 31, 2009, respectively
|
10,292
|
10,547
|
||||||
Total
other assets
|
18,282
|
18,537
|
||||||
Total
Assets
|
$
|
4,021,208
|
$
|
2,874,748
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$
|
212,760
|
$
|
398,734
|
||||
Payroll
and related liabilities
|
581,490
|
1,185,638
|
||||||
Accrued
expenses
|
15,750
|
8,057
|
||||||
Deferred
rent
|
743
|
1,192
|
||||||
Total
current liabilities
|
810,743
|
1,593,621
|
||||||
LONG
TERM LIABILITIES:
|
||||||||
Senior
Secured Convertible Note – net of debt discount - related
party
|
489,107
|
-
|
||||||
Total
liabilities
|
1,299,850
|
1,593,621
|
||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Common
stock, par value $0.00001,
|
||||||||
100,000,000
shares authorized;
72,078,724
and 28,600,464 shares issued and outstanding, respectively
|
721
|
286
|
||||||
Additional
paid in capital
|
48,507,934
|
45,865,352
|
||||||
Deficit
accumulated during the development stage
|
(45,787,297
|
)
|
(44,584,511
|
)
|
||||
Total
stockholders’ equity
|
2,.721,358
|
1,281,127
|
||||||
Total
liabilities and stockholders’ equity
|
$
|
4,021,208
|
$
|
2,874,748
|
Three
Months Ended
November
30,
2009
|
Three
Months Ended
November
30,
2008
|
Six
Months Ended
November
30,
2009
|
Six
Months Ended
November
30,
2008
|
From Inception
Through
November
30,
2009
|
||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Operating
Expenses
|
||||||||||||||||||||
Research
and development (including depreciation and amortization)
|
148,922 | 842,840 | 342,187 | 1,864,338 | 28,095,971 | |||||||||||||||
Administrative
(including depreciation and amortization)
|
230,745 | 599,510 | 373,752 | 1,231,341 | 15,988,389 | |||||||||||||||
Professional
fees
|
310,146 | 93,706 | 453,275 | 263,293 | 3,698,409 | |||||||||||||||
Depreciation
and amortization
|
10,868 | 1,023 | 15,070 | 2,108 | 178,886 | |||||||||||||||
Operating
loss
|
(700,681 | ) | (1,537,079 | ) | (1,184,284 | ) | (3,361,080 | ) | (47,961,655 | ) | ||||||||||
Other
income (expense)
|
||||||||||||||||||||
Interest
income
|
(1,597 | ) | 16,509 | (1,265 | ) | 55,560 | 2,194,613 | |||||||||||||
Interest
expense
|
(10,845 | ) | - | (10,845 | ) | - | (81,457 | ) | ||||||||||||
Gain
on disposal of equipment, net
|
- | - | - | 78,174 | 67,594 | |||||||||||||||
Loss
on sale of investments
|
(6,392 | ) | - | (6,392 | ) | - | (6,392 | ) | ||||||||||||
Net
loss
|
$ | (719,515 | ) | $ | (1,520,570 | ) | $ | (1,202,786 | ) | $ | (3,227,346 | ) | $ | (45,787,297 | ) | |||||
Weighted
average number of common shares outstanding
|
37,882,340 | 28,600,464 | 33,164,480 | 28,600,464 | 19,115,020 | |||||||||||||||
Loss
per common share – basic and diluted
|
$ | (0.02 | ) | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.11 | ) | $ | (2.40 | ) |
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During The
|
||||||||||||||||||||||
Common Stock
|
Paid in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
September
17, 1999 — initial issuance of 10,000 shares for intellectual technology
license at $.03 per share
|
10,000
|
$
|
300
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
300
|
|||||||||||||
September
30, 1999 — cost of public shell acquisition over net assets acquired to be
accounted for as a Recapitalization
|
—
|
—
|
—
|
(250,000
|
)
|
—
|
(250,000
|
)
|
||||||||||||||||
October
27, 1999 — issuance of 84 shares to individual for $25,000
|
84
|
25,000
|
—
|
—
|
—
|
25,000
|
||||||||||||||||||
November
15, 1999 — reverse merger transaction with Enerdyne Corporation, net
transaction amounts
|
8,972,463
|
118,547
|
—
|
(118,547
|
)
|
—
|
—
|
|||||||||||||||||
November
18, 1999 — February 7, 2000 — issuance of 459,444 shares to various
investors at $0.36 per share
|
459,444
|
165,400
|
—
|
—
|
—
|
165,400
|
||||||||||||||||||
January
1, 2000 — issuance of 100,000 shares in exchange for legal
services
|
100,000
|
15,000
|
—
|
—
|
—
|
15,000
|
||||||||||||||||||
May
1 - 27, 2000 — issuance of 640,000 shares to various investors at $1.00
per share
|
640,000
|
640,000
|
—
|
—
|
—
|
640,000
|
||||||||||||||||||
May
27, 2000 — issuance of 1,644 shares to an individual in exchange for
interest Due
|
1,644
|
1,644
|
—
|
—
|
—
|
1,644
|
||||||||||||||||||
Net
loss for the year ended May 31, 2000
|
—
|
—
|
—
|
—
|
(250,689
|
)
|
(250,689
|
)
|
||||||||||||||||
Balance,
May 31, 2000
|
10,183,635
|
965,891
|
—
|
(368,547
|
)
|
(250,689
|
)
|
346,655
|
||||||||||||||||
December
7, 2000 — issuance of 425,000 shares to various investors at $1.00 per
share
|
425,000
|
425,000
|
—
|
—
|
—
|
425,000
|
||||||||||||||||||
May
31, 2001 — Forgiveness of debt owed to shareholder
|
—
|
—
|
40,000
|
—
|
—
|
40,000
|
||||||||||||||||||
Net
loss for the year ended May 31, 2001
|
—
|
—
|
—
|
—
|
(553,866
|
)
|
(553,866
|
)
|
||||||||||||||||
Balance,
May 31, 2001
|
10,608,635
|
1,390,891
|
40,000
|
(368,547
|
)
|
(804,555
|
)
|
257,789
|
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During The
|
||||||||||||||||||||||
Common Stock
|
Paid in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
August
13, 2001 — Contribution by Shareholders
|
—
|
—
|
143,569
|
—
|
—
|
143,569
|
||||||||||||||||||
November
7, 2001 — issuance of 881,600 Shares at $1.25 per share
|
881,600
|
1,102,000
|
—
|
—
|
—
|
1,102,000
|
||||||||||||||||||
November
26, 2001 — options issued to board member
|
—
|
—
|
133,000
|
—
|
—
|
133,000
|
||||||||||||||||||
Net
loss for the year ended May 31, 2002
|
—
|
—
|
—
|
—
|
(1,280,465
|
)
|
(1,280,465
|
)
|
||||||||||||||||
Balance,
May 31, 2002
|
11,490,235
|
2,492,891
|
316,569
|
(368,547
|
)
|
(2,085,020
|
)
|
355,893
|
||||||||||||||||
July
5, 2002 — issuance of 842,000 shares at $1.50 per share
|
842,000
|
1,263,000
|
—
|
—
|
—
|
1,263,000
|
||||||||||||||||||
July
1, 2002 - May 1, 2003 – purchase of common stock from shareholder at $.70
per share
|
(130,955
|
)
|
(91,667
|
)
|
—
|
—
|
—
|
(91,667
|
)
|
|||||||||||||||
January
15, 2003 - May 15, 2003 — common stock issued to Company
president
|
41,670
|
82,841
|
—
|
—
|
—
|
82,841
|
||||||||||||||||||
May
14, 2003 — common stock issued to employee
|
5,000
|
11,250
|
—
|
—
|
—
|
11,250
|
||||||||||||||||||
June
1, 2002 - May 31, 2003 – compensation related to stock options issued to
board members, employees and consultants
|
—
|
—
|
287,343
|
—
|
—
|
287,343
|
||||||||||||||||||
Net
loss for the year ended May 31, 2003
|
—
|
—
|
—
|
—
|
(1,665,090
|
)
|
(1,665,090
|
)
|
||||||||||||||||
Balance,
May 31, 2003
|
12,247,950
|
3,758,315
|
603,912
|
(368,547
|
)
|
(3,750,110
|
)
|
243,570
|
||||||||||||||||
June
15, 2003, common stock issued to Company president
|
8,334
|
16,418
|
—
|
—
|
—
|
16,418
|
||||||||||||||||||
June
15, 2003, purchase of common stock from shareholder
|
(12,093
|
)
|
(8,333
|
)
|
—
|
—
|
—
|
(8,333
|
)
|
|||||||||||||||
September
18, 2003 – issuance of 7,445,646 of common stock issued in private
placement At $1.70 per share, net of transaction costs
|
7,445,646
|
11,356,063
|
—
|
—
|
—
|
11,356,063
|
||||||||||||||||||
September
19, 2003 – repurchase and retired 2,994,803 shares for
$300,000
|
(2,994,803
|
)
|
(300,000
|
)
|
—
|
—
|
—
|
(300,000
|
)
|
|||||||||||||||
December
12, 2003 – issuance of 39,399 shares to terminated employees at $2.60 per
share
|
39,399
|
102,438
|
—
|
—
|
—
|
102,438
|
||||||||||||||||||
March
1, 2004 – common stock issued to employee at $2.55 per
share
|
50,000
|
127,500
|
—
|
—
|
—
|
127,500
|
||||||||||||||||||
May
31, 2004 – reclassify common stock contra to common stock
|
—
|
(368,547
|
)
|
—
|
368,547
|
—
|
—
|
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During The
|
||||||||||||||||||||||
Common Stock
|
Paid in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
June
1, 2003 – May 31, 2004 – compensation related to stock options issued to
board members, employees and consultants
|
—
|
—
|
448,096
|
—
|
—
|
448,096
|
||||||||||||||||||
Net
loss for the year ended May 31, 2004
|
—
|
—
|
—
|
—
|
(2,989,364
|
)
|
(2,989,364
|
)
|
||||||||||||||||
Balance,
May 31, 2004
|
16,784,433
|
14,683,854
|
1,052,008
|
—
|
(6,739,474
|
)
|
8,996,388
|
|||||||||||||||||
November
30, 2004 – adjust March 1, 2004 common stock issued to
employee
|
—
|
(20,000
|
)
|
—
|
—
|
(20,000
|
)
|
|||||||||||||||||
January
13, 2005 – common stock issued to employee at $2.55 per
share
|
15,000
|
38,250
|
—
|
—
|
—
|
38,250
|
||||||||||||||||||
February
28, 2005 – Reclass Par Value for Reincorporation into DE as of
12/1/04
|
—
|
(14,701,935
|
)
|
14,701,935
|
—
|
—
|
0
|
|||||||||||||||||
May
25, 2005 - issuance of 2,593,788 shares of common stock issued in private
placement At $1.95 per share, net of transaction costs
|
2,593,788
|
25
|
4,851,168
|
—
|
—
|
4,851,193
|
||||||||||||||||||
June
1, 2004 – May 31, 2005 – compensation related to stock options issued to
board members, employees and consultants
|
—
|
—
|
308,711
|
—
|
—
|
308,711
|
||||||||||||||||||
Net
loss for the year ended May 31, 2005
|
—
|
—
|
—
|
—
|
(5,567,729
|
)
|
(5,567,729
|
)
|
||||||||||||||||
Balance,
May 31, 2005
|
19,393,221
|
194
|
20,913,822
|
—
|
(12,307,203
|
)
|
8,606,813
|
|||||||||||||||||
August
23, 2005 – common stock issued to employee
|
40,000
|
0
|
100,000
|
—
|
—
|
100,000
|
||||||||||||||||||
October
19, 2005 – common stock issued to employee
|
10,000
|
0
|
25,000
|
—
|
—
|
25,000
|
||||||||||||||||||
December
30, 2005 – issuance of 2,595,132 shares of common stock issued in private
placement at $2.25 per share, net of transaction costs
|
2,595,132
|
26
|
5,510,941
|
—
|
—
|
5,510,967
|
||||||||||||||||||
June
1, 2005 – May 31, 2006 – warrants exercised
|
351,598
|
4
|
786,534
|
—
|
—
|
786,538
|
||||||||||||||||||
June
1, 2005– May 31, 2006 – compensation related to stock options issued to
board members, employees and consultants
|
—
|
—
|
404,679
|
—
|
—
|
404,679
|
||||||||||||||||||
Net
loss for the year ended May 31, 2006
|
—
|
—
|
—
|
—
|
(6,104,402
|
)
|
(6,104,402
|
)
|
||||||||||||||||
Balance,
May 31, 2006
|
22,389,951
|
224
|
27,740,976
|
—
|
(18,411,605
|
)
|
9,329,595
|
Deficit
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Common
|
During The
|
||||||||||||||||||||||
Common Stock
|
Paid in
|
Stock-
|
Development
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Contra
|
Stage
|
Total
|
|||||||||||||||||||
July
7, 2006 – issuance of 6,071,013 shares of common stock issued in private
placement at $2.50 per share, net of transaction costs
|
6,071,013 | 61 | 14,217,660 | — | — | 14,217,721 | ||||||||||||||||||
June
1, 2006 – May 31, 2007 – warrants exercised
|
133,500 | 1 | 300,373 | — | — | 300,374 | ||||||||||||||||||
June
1, 2006 – May 31, 2007 – stock options exercised
|
6,000 | 0 | 15,200 | — | — | 15,200 | ||||||||||||||||||
June
1, 2006 – May 31, 2007 – share based compensation to board members,
employees and consultants
|
— | — | 1,826,850 | — | — | 1,826,850 | ||||||||||||||||||
Net
loss for the year ended May 31, 2007
|
— | — | — | — | (8,451,942 | ) | (8,451,942 | ) | ||||||||||||||||
Balance,
May 31, 2007
|
28,600,464 | 286 | 44,101,059 | — | (26,863,547 | ) | 17,237,798 | |||||||||||||||||
June
1, 2007 – May 31, 2008 – share based compensation to board members,
employees and consultants
|
— | — | 1,011,025 | — | — | 1,011,025 | ||||||||||||||||||
Net
loss for the year ended May 31, 2008
|
— | — | — | — | (10,490,758 | ) | (10,490,758 | ) | ||||||||||||||||
Balance,
May 31, 2008
|
28,600,464 | 286 | 45,112,084 | — | (37,354,305 | ) | 7,758,065 | |||||||||||||||||
June
1, 2008 – May 31, 2009 – shared-based compensation to board members,
employees and consultants
|
— | — | 753,268 | — | — | 753,268 | ||||||||||||||||||
Net
loss for the year ended May 31, 2009
|
— | — | — | — | (7,230,206 | ) | (7,230,206 | ) | ||||||||||||||||
Balance,
May 31, 2009
|
28,600,464 | 286 | 45,865,352 | — | (44,584,511 | ) | 1,281,127 | |||||||||||||||||
June
1, 2009 – November 30, 2009 – shared-based expense to employees and debt
holders
|
— | — | 130,457 | — | — | 130,457 | ||||||||||||||||||
November
11, 2009 – record beneficial conversion value of warrants attached to
senior secured convertible debt
|
— | — | 512,560 | — | — | 512,560 | ||||||||||||||||||
November
11, 2009 – issuance of 43,478,260 shares of common stock
|
43,478,260 | 435 | 1,999,565 | — | — | 2,000,000 | ||||||||||||||||||
Net
loss for the six months ended November 30, 2009
|
— | — | — | — | (1,202,786 | ) | (1,202,786 | ) | ||||||||||||||||
Balance,
November 30, 2009
|
72,078,724 | $ | 721 | $ | 48,507,934 | $ | — | $ | (45,787,297 | ) | $ | 2,721,358 |
Six
|
Six
|
From
Inception
|
||||||||||
Months Ended
|
Months Ended
|
Through
|
||||||||||
November
30,
|
November
30,
|
November
30,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$
|
(1,202,786
|
)
|
$
|
(3,227,346
|
)
|
$
|
(45,787,297
|
)
|
|||
Adjustments
to reconcile net loss to net cash and cash equivalents used in operating
activities
|
||||||||||||
(Gain)
on disposal of equipment, net
|
—
|
(78,174
|
)
|
(67,594
|
)
|
|||||||
Depreciation
and amortization
|
15,070
|
41,164
|
919,772
|
|||||||||
Share
based compensation expense
|
130,457
|
370,830
|
5,787,125
|
|||||||||
Non
cash expenses
|
—
|
—
|
16,644
|
|||||||||
(Increase)/decrease
in:
|
||||||||||||
Prepaid
expenses and deposits
|
115,531
|
26,037
|
(86,216
|
)
|
||||||||
Increase/(decrease)
in:
|
||||||||||||
Accounts
payable and accrued expenses
|
(178,281
|
)
|
(644,551
|
)
|
228,510
|
|||||||
Payroll
and related liabilities
|
(604,148
|
)
|
(188
|
)
|
581,490
|
|||||||
Other
liabilities
|
—
|
101
|
1,192
|
|||||||||
Net
cash and cash equivalents used in operating activities
|
(1,724,157
|
)
|
(3,512,127
|
)
|
(38,406,374
|
)
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Acquisition
of intellectual technology license – fee portion
|
—
|
—
|
(20,000
|
)
|
||||||||
Acquisition
of equipment
|
—
|
—
|
(905,936
|
)
|
||||||||
Excess
of amounts paid for public shell over assets acquired to be accounted for
as a recapitalization
|
—
|
—
|
(250,000
|
)
|
||||||||
Proceeds
from disposal of equipment
|
11,565
|
200,000
|
217,565
|
|||||||||
Net
cash and cash equivalents provided by (used in) investing
activities
|
11,565
|
200,000
|
(958,371
|
)
|
||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from stock issuance, including options and warrants
exercised
|
2,000,000
|
—
|
42,658,458
|
|||||||||
Principal
payment on equipment notes payable and capital leases
|
—
|
—
|
(295,411
|
)
|
||||||||
Contribution
by shareholders
|
—
|
—
|
183,569
|
|||||||||
Principal
payment on note payable to individuals
|
—
|
—
|
(225,717
|
)
|
||||||||
Issuance
of note payable to individuals
|
1,000,000
|
—
|
1,368,546
|
|||||||||
Acquisition
of common stock
|
—
|
—
|
(400,000
|
)
|
||||||||
Net cash and cash equivalents provided by financing
activities
|
3,000,000
|
—
|
43,289,445
|
|||||||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
1,287,408
|
(3,312,127)
|
3,924,700
|
|||||||||
Cash
and cash equivalents, beginning
|
2,637,292
|
8,442,809
|
—
|
|||||||||
Cash
and cash equivalents, ending
|
$
|
3,924,700
|
$
|
5,130,682
|
$
|
3,924,700
|
||||||
SUPPLEMENTAL
SCHEDULE OF CASH FLOW INFORMATION:
|
||||||||||||
Interest
paid
|
$
|
—
|
$
|
—
|
$
|
66,770
|
||||||
Taxes
paid
|
$
|
—
|
$
|
—
|
$
|
100
|
Six Months
Ended
November
30,
2009
|
Six Months
Ended
November
30,
2008
|
From
Inception
through
November
30,
2009
|
||||||||||
Dividends
per year
|
0
|
0
|
0
|
|||||||||
Volatility
percentage
|
97.5
|
% |
96%-112
|
%
|
90%-112
|
%
|
||||||
Risk
free interest rate
|
3.47
|
% |
3.11%-3.51
|
%
|
2.07%-5.11
|
%
|
||||||
Expected
life (years)
|
6.25-10
|
6.25-10
|
3-10
|
|||||||||
Weighted
average fair value
|
$
|
.035
|
$
|
.39
|
$
|
1.56
|
Shares
|
Weighted
Average Exercise
Price
|
Weighted Average
Remaining
Contractual Term
(Years)
|
||||||||||
Outstanding
at May 31, 2009
|
3,296,812
|
$
|
1.57
|
6.0
|
||||||||
Granted
|
—
|
—
|
—
|
|||||||||
Exercised
|
—
|
—
|
—
|
|||||||||
Forfeited
|
(405,811
|
)
|
$
|
0.70
|
—
|
|||||||
Expired
|
(1,094,079
|
)
|
$
|
1.52
|
—
|
|||||||
Outstanding
at November 30, 2009
|
1,796,922
|
$
|
1.61
|
4.0
|
||||||||
Exercisable
at November 30, 2009
|
1,693,998
|
$
|
1.66
|
3.7
|
Total
|
Exercisable
|
||||||||||||||||||||||||
Exercise
Price Range
|
Number
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
(years)
|
Number
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
(years)
|
|||||||||||||||||||
$ 0.00 – 0.45 |
100,000
|
$
|
0.45
|
8.6
|
33,344
|
$
|
0.45
|
8.6
|
|||||||||||||||||
$0.90
– 1.35
|
160,000
|
$
|
1.23
|
4.3
|
127,505
|
$
|
1.24
|
4.3
|
|||||||||||||||||
$1.36
– 1.80
|
1,256,922
|
$
|
1.50
|
3.1
|
1,256,922
|
$
|
1.50
|
3.1
|
|||||||||||||||||
$1.81
– 2.25
|
17,000
|
$
|
2.15
|
7.2
|
14,812
|
$
|
2.15
|
7.2
|
|||||||||||||||||
$2.26
– 2.70
|
100,000
|
$
|
2.60
|
5.4
|
100,000
|
$
|
2.60
|
5.4
|
|||||||||||||||||
$2.71
– 3.15
|
163,000
|
$
|
2.88
|
6.2
|
161,415
|
$
|
2.88
|
6.2
|
|||||||||||||||||
1,796,922
|
$
|
1.61
|
4.0
|
1,693,998
|
$
|
1.66
|
4.0
|
Exhibit
No.
|
Description
|
|
4.1
|
Secured
Convertible Promissory Note dated November 11, 2009.(1)
|
|
10.1
|
Note
and Common Stock Purchase Agreement dated November 11, 2009, between the
Company and Niobe Ventures, LLC.(1)
|
|
10.2
|
Security
Agreement dated November 11, 2009, between the Company and Niobe
Ventures, LLC.(1)
|
|
10.3
|
Form
of Indemnification Agreement dated November 11, 2009 between the Company
and each of Messrs. Kling and Warshaw.(1)
|
|
10.4
|
Final
Form of Credit Facility Agreement dated as of December 2, 2009, between
the Company and Niobe Ventures, LLC.(2)
|
|
10.5
|
Final
Form of Amended and Restated Security Agreement dated as of December 2,
2009, between the Company and Niobe Ventures, LLC.(2)
|
|
10.6
|
**Form
of Non-Qualified Stock Option Agreement with Kirk M.
Warshaw.
|
|
31.1
|
Certification
of the President pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
32.1
|
Certification
of the President pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
|
(1)
|
Filed
on November 13, 2009 as an exhibit with the same number with the Company’s
Current Report on Form 8-K.
|
|
(2)
|
Filed
on December 2, 2009 as an exhibit with the same number with the Company’s
Current Report on Form 8-K.
|
Date:
January 8, 2010
|
PROTALEX,
INC.
|
|
By:
/s/ Arnold P. Kling
|
||
Arnold
P. Kling, President
|
Date:
January 8, 2010
|
||
By:
/s/ Kirk M. Warshaw
|
||
Kirk
M. Warshaw, Chief Financial Officer
|
Milestone
1:
|
Upon
the commencement of the Company’s Rheumatoid Arthritis trial in South
Africa (the “RA Trial”), this option shall vest and become exercisable
with respect to the purchase of up to 1,501,086 shares of Common
Stock;
|
Milestone 2:
|
Upon
demonstrated efficacy of the RA Trial, this option shall vest and become
exercisable with respect to the purchase of up to 2,626,900 shares of
Common Stock, including the shares from Milestone 1;
and
|
Milestone 3:
|
Upon
the execution of either a licensing, strategic or financing agreement with
a strategic or financial third party which yields minimum gross proceeds
to the Company of $7.5 million, this option shall vest and become
exercisable with respect to the purchase of up to 3,752,714 shares of
Common Stock, including the shares from Milestones 1 and
2.
|
|
(e)
|
Notwithstanding
the provision of Section 3(d)
above:
|
|
5.
|
Investment
Representation; Legend on Certificates; Special Restriction on
Resale
.
|
PROTALEX,
INC.
|
|||
|
By:
|
||
Arnold
P. Kling, President
|
|||
Kirk
M. Warshaw, Optionee
|
1.
|
I
have reviewed this quarterly Report on Form 10-Q of Protalex,
Inc.;
|
2.
|
Based
on my knowledge, this Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
Report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
Report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f))for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this Report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this Report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/
Arnold P. Kling.
|
Arnold
P. Kling
|
President
|
(Principal
Executive
Officer)
|
1.
|
I
have reviewed this quarterly Report on Form 10-Q of Protalex
Inc.;
|
2.
|
Based
on my knowledge, this Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
Report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
Report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f))for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this Report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this Report based on such evaluation;
and
|
|
d)
|
Disclosed
in this Report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/
Kirk M. Warshaw
|
Kirk
M. Warshaw
|
Chief
Financial Officer
|
(Principal
Financial Officer)
|
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
/s/
Arnold P. Kling
|
Arnold
P. Kling
|
President
|
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
/s/
Kirk M. Warshaw
|
Chief
Financial Officer
|